Companies Struggle to Make Carbon Capture Viable


Deep in Canada’s oil country, a group of energy companies is trying to perform something close to a miracle: making dirty fossil fuels green. The project — buoyed by grants from the Canadian government reaching almost $1 billion — involves capturing carbon dioxide from an oil plant near Fort Saskatchewan, Alberta, and then pumping the emissions deep underground, out of harm’s way. When construction finishes in late 2015, the project could cut emissions from the local oil facility by up to 35 percent, according to industry estimates. It will also represent the first time this so-called carbon capture and storage technology, or C.C.S., has been used in energy companies’ efforts to extract fossil fuels from Canada’s heavily polluting oil sands deposits. “If you really want to reduce emissions, there’s no alternative,” said Tim Bertels, head of carbon capture and storage at Shell, the global energy giant that is behind the Alberta project, which also includes Chevron and Marathon Oil. “We’re taking the lead to show that this works. We need to start now.” Despite the energy companies’ efforts, the project in Alberta remains one of the few bright spots in the decade-long global push to bring carbon capture and storage technology into the mainstream. Since the mid-2000s, several demonstration projects, from the United States to Spain, have received hundreds of millions of combined government support — and additional private funding — to show that the technology can significantly reduce carbon emissions from the world’s dirtiest power and industrial plants. So far, however, few projects have proved their worth. A combination of skyrocketing construction costs and volatile energy prices have made it difficult for companies and governments to quantify the often eye-watering investments. Analysts have questioned how the carbon-capturing technology, which has been used for decades in the oil industry, can be rolled out efficiently — and safely — in heavily polluting power plants. Environmental campaigners and some national politicians have balked at spending huge amounts of money on legacy fossil-fuel infrastructure when public money could be spent on newer technologies like offshore wind farms and solar energy parks. “The attempts to overcome the high barriers for the technology haven’t really worked,” said Samuela Bassi, an environmental policy analyst at the London School of Economics. Carbon capture and storage “is a hefty investment,” she added. “But even if it’s expensive, we will need to find a way of bringing it into the overall energy mix.” The attempts to make the technology commercially viable come as most policy makers, energy companies and even some environmentalists acknowledge that there are few alternatives to reducing global carbon emissions. While the likes of wind and solar power have become increasingly widespread, especially in Europe and North America, fossil fuels are still the source for roughly three-quarters of the world’s total electricity generation, according to the United States Energy Information Administration. That is particularly true in emerging markets like China, Brazil and India that are investing heavily in their energy infrastructure to bolster their domestic economies. Combined with heavy-polluting industrial processes like steel and cement manufacturing, fossil fuels are likely to play a role in almost all economic activity for decades to come, according to analysts. Energy executives say that this will require investing in solutions — like capturing carbon and storing it underground — that can help meet global goals of limiting temperature increases to just 2 degrees Celsius, or 3.6 degrees Fahrenheit, from preindustrial levels. “Fossil fuels aren’t going anywhere,” said Andy Purvis, the European general manager at the Global C.C.S. Institute, a trade body, in Brussels. “You have to try to find ways of reducing those emissions.” Global efforts moved a step forward late last year after a Canadian power plant became the first facility in the world to use carbon capturing technology on an industrial scale. The plant, which received sizable financial backing from the Canadian government, now traps up to 90 percent of its carbon dioxide, the equivalent of taking about 250,000 cars off the road each year. For most backers of carbon capture and storage, however, the major barrier remains its high price tag. In Europe, for example, it would cost up to a combined $40 billion by 2030 to install the technology to cover 11 gigawatts of fossil fuel generation, or roughly 10 coal or natural gas power plants, according to the Grantham Research Institute on Climate Change and the Environment. The complex infrastructure required to capture carbon from plants, transport the emissions through miles of pipelines and store the cocktail of gases deep underground also puts the technology beyond the grasp of most utilities. Analysts say, for instance, that capturing carbon can almost double the cost of building a new coal-fired power plant, and can add up to 50 percent to the price of a natural gas facility. And unlike the funding available for environmentally friendlier energy sources like wind and solar power, which receive substantial subsidies and tax breaks from national governments, no similar help is available in most countries for capturing and storing carbon. The lack of a credible price on carbon dioxide emissions — at a regional or global scale — that would make the technology more cost-effective compared to dirtier alternatives also has reduced the appetite for most energy producers. “Public commitments to help this technology need to be more sustainable,” said Matt Farren-Handford, a senior manager in the climate change and sustainability practice in Houston at Ernst & Young, the consulting firm. “We’re talking tens of billions of dollars to be spent on projects. Companies need regulatory support.” These price pressures have taken their toll, even as energy companies, governments and research institutes continue to clamor for more funding to prove that capturing carbon can help reduce emissions. This year, the United States government pulled support from a new coal power plant to be built in Illinois that would have included the carbon-reducing technology. American policy makers said the project’s private backers could not meet a deadline to secure investment for the facility. In Europe, three carbon-capture projects in Germany, Italy and Poland have also been scrapped because of a lack of financial support, along with questions over legal liability if the emissions escaped from underground storage facilities and public anger about fossil-fuel projects. The number of test projects worldwide has almost halved in the last five years, to less than 20 projects, according to industry statistics. And in late September, the backers of a demonstration site in Britain — one of the few countries that offer financial support for the capturing and storage technology — pulled the plug on the $1.5 billion project after local policymakers reduced subsidies for green energy projects. “People are paying close attention to how the technology is developing, but we are nowhere near where we need to be,” said Kevin Magner, a director in the government and infrastructure practice at Deloitte, the consulting firm, in London. “There needs to be more political will to make this happen.”



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